Tag: Fed Balance Sheet

April 3, 2018

Perspective

Visual Capitalist – Visualizing the Average Commute Time in U.S. States and Cities – Jeff Desjardins 4/1

Worthy Insights / Opinion Pieces / Advice

FT – Columbus shows Trump how to thrive in the new world order – Rana Foroohar 4/1

  • “The city’s success shows why industrial policy, not tariffs, is the winning strategy.”

Project Syndicate – Will China Really Supplant US Economic Hegemony? – Kenneth Rogoff 4/2

Seeking Alpha – Tesla Model 3 Costs More To Charge Than A Gasoline Car – Anton Wahlman 4/1

WSJ – U.S. Fiscal Future Won’t Be Like Its Carefree Past – Greg Ip 3/28

Energy

FT – Wary shale investors warn against drilling at all costs – Ed Crooks 4/1

Finance

WSJ – Daily Shot: FRED – Federal Reserve Total Assets (Balance Sheet) 4/2

WSJ – Daily Shot: FRED – Commercial and Industrial Loans 4/2

Cryptocurrency / ICOs

WSJ – Daily Shot: Investing.com – Bitcoin v. Bitcoin Cash 4/2

Entertainment

WSJ – Dominant Box Office Run of ‘Black Panther’ Underscores a Growing Hollywood Problem – Ben Fritz 4/1

  • “This year’s box office so far has been a story of one completely dominant movie, ‘Black Panther,’ highlighting a potentially troubling trend for Hollywood in which ticket sales are increasingly concentrated among just a few ultra-successful pictures.”
  • “With $650.7 million and counting, ‘Black Panther’ is on track to become the third highest grossing movie ever in the U.S. and Canada. It accounted for 23% of all ticket sales in the first three months of the year, ending Saturday, according to comScore. That is the second-highest percentage ever behind only ‘Titanic,’ which took 25% in the winter of 1998.”
  • “’Black Panther’ is an extreme example of the trend that Hollywood has been struggling with for some years. In 2015, 2016 and 2017, the top 10 movies raked in between 32% and 35% of total box office, comScore said. Previously, that figure never exceeded 30%. So far this year, it is 58%.

Health / Medicine

Axios – Opioid prescription rates dropping across the country – Stef W. Kight and Lazaro Gamio 3/31

Canada

Bloomberg – Toronto’s Tale of Two Markets Is Hot Condos and Cold Houses – Natalie Wong 3/29

  • “After a decade as one of the world’s hottest housing markets, Toronto is moving in two directions. Transactions have certainly cooled since May as the government introduced new rules to tame runaway prices. But the impact has been largely on big, expensive detached homes, with sales plunging 41% in February from a year earlier, and prices dropping 12% since hitting a record last year. Condo prices, in contrast, soared about 20% since last February.”
  • “The deviation is largely as a result of mortgage regulations that went into effect on Jan. 1 as well as rising interest rates. The rule requires that even people with a 20% down payment, who don’t require mortgage insurance, prove they can make payments at least 2% points above the rates under which they go into contract.”
  • “That’s pushing buyers out of the detached segment and right into the condo market.”

China

FT – China’s P2P lenders brace for renewed regulatory crackdown – Emily Feng 4/1

  • “Thousands of online lenders could be facing extinction as China rolls out a new licensing framework, amid complaints about a lack of clarity on how the regime will work.”
  • “P2P platforms match borrowers with investors online. China’s P2P lending industry recorded transactions valued at $445bn in 2017, according to Online Lending Club, a data company.”
  • “Many P2P lenders, including one of the largest, Hongling Capital, were weeded out in crackdowns in 2016 and 2017 after agencies reporting to China’s central bank began closing fraudulent platforms and those selling high-interest loans.”
  • “Of more than 6,000 online lending platforms launched over the past several years, fewer than 2,000 were still in operation at the end of February, according to Online Lending House, a data provider — a sign of how regulation, competition and fraud have thinned the industry’s ranks.”
  • “As part of the regulatory overhaul, P2P lenders are barred from guaranteeing principal or interest on loans they facilitate; are limited to loans of no more than Rmb1m ($159,000) for individual borrowers and Rmb5m for companies; and must use custodian banks.”

FT – China revives long-stalled property tax to combat housing bubble – Gabriel Wildau and Yizhen Jia 3/31

  • “After years of delay and quiet opposition from vested interests, China will push ahead with a property tax that is viewed as crucial to taming the country’s housing bubble.”
  • “House prices in major Chinese cities are among the highest in the world in terms of price-income ratios, with speculative demand from Chinese investors — who see few other good places to park their savings — as a major driver. The result is an estimated 50m empty homes, according to a broad survey by researchers from Southwestern University of Finance and Economics in Chengdu.”
  • “A landmark blueprint for economic reform that the Communist party leadership approved five years ago included a pledge to push ahead with a property tax. But a subsequent slowdown in the economy, including a housing-market downturn in 2014-15, prompted authorities to shelve those plans.” 
  • “Quiet opposition from wealthy urbanites, including government officials who own multiple homes, also hindered progress.” 
  • “’When will the tax actually come out is difficult to say, but at least the intention has strengthened,’ said Chen Shen, head of property research at China Securities in Shanghai. ‘Two years ago everyone was discussing whether it would ever happen, but now it’s very clear that it will’.” 

Japan

WSJ – Daily Shot: @NickTimiraos – Change in Home Prices – Japan & U.S. 4/2

Other Interesting Links

WSJ – Dockless Bike Share Floods into U.S. Cities, With Rides and Clutter – Eliot Brown 3/26

 

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September 20, 2017

Perspective

Economist – Ryanair’s mass cancellations are a problem of its own making – Gulliver 9/19

  • “When Ryanair convinced many of its pilots to take fewer holidays during peak summer-travel season, it probably thought it was being clever. But poor planning and a bit of bad luck have left the airline with a shortage of working pilots, many of whom have now taken time off, for the autumn. The shortfall has forced Ryanair to cancel some 2,100 flights starting on September 16th and continuing through October.” 
  • “Ryanair’s woes were caused in part by a change in the way the airline determines employee leave. Previously, Ryanair counted holidays in the year from April. In 2016, under pressure from the Irish Aviation Authority, Ryanair adopted the calendar year instead. As part of the transition, it needed to allow its employees to take the entirety of their leave between April and December of this year, leaving it with a staff shortage. As a result, the airline will probably have to scrap around 50 flights every day until the end of October.”

Markets / Economy

WSJ – The Fed, a Decade After the Crisis, Is About to Embark on the Great Unwinding – Nick Timiraos 9/18

  • “The central bank is likely to announce Wednesday it will start slowly shrinking its $4.2 trillion portfolio of mortgage and Treasury bonds purchased during and after the financial crisis. It will do so passively by allowing some bonds to mature without replacing them next month.”
  • “In June, the Fed said when it started to shrink its balance sheet it would do so by allowing a small initial amount of bonds—$4 billion of mortgages and $6 billion in Treasurys per month—to run off the portfolio without reinvestment. Every quarter, it will let a slightly larger amount do so, up to a maximum of $20 billion in mortgages and $30 billion in Treasurys per month.”
  • “For the next year or so, the Fed should still end up buying bonds in most months, since only a small fraction will mature and go not replaced, said Richard Clarida, an economist at Pacific Investment Management Co., or Pimco. He compared the start of the plan to losing weight by eating only two desserts a day instead of three.”
  • “One question the central bank hasn’t yet decided: How large should its balance sheet be at the end of the process?”
  • “Its holdings have swelled to $4.5 trillion from less than $900 billion before 2008. Though they will fall, the Fed will end up with more assets than it had before the crisis because its liabilities have grown—there’s more currency in circulation. The balance sheet size could settle out at between $2.4 trillion and $3.5 trillion sometime early next decade, New York Fed President William Dudley said in a speech earlier this month.”
  • “That would mean the Fed would end up allowing only around $1 trillion to $2 trillion in securities to mature, after having added $3.7 trillion between 2008 and 2014.”
  • “One reason markets have been relatively unfazed is that central banks in Europe and Japan are still purchasing assets. Mr. Spector (David Spector, CEO) of PennyMac expects the start of the Fed’s unwinding to have little effect on mortgage rates, which in early September hit their lowest levels of the year.”

FT – Private equity: wing and a prayer – Lex 9/18

China

WSJ – China’s Backdoor Real-Estate Bailout – Nathaniel Taplin 9/18

  • “Chinese property data out Monday showed housing prices weakening across the board in August. Usually this would be a good point to exit China growth plays.”
  • “But another 2015-style collapse in Chinese commodity demand remains unlikely. The reason? Slum clearance. Local governments are directly buying up large quantities of houses developers haven’t been able to sell and filling them with citizens relocated from what they call ‘slums’—old, sometimes dilapidated neighborhoods.”
  • “That helps explain why the drop in unsold inventories of apartments over the past year has been so sharp—down 22% on the year in August. That has helped prop up the market, especially in China’s smaller cities, despite more restrictions on housing purchases and slowing official figures on sales growth.”
  • “The scale of the program is large, accounting for 18% of floor space sold in 2016, according to Rosealea Yao, senior analyst at Gavekal Dragonomics, and is being partly funded by state policy banks like China Development Bank. That fits with Beijing’s broader strategy to head off a debt crisis by helping overextended property and industrial companies shift their debts and bad assets onto the government. Part of that is through a massive expansion of municipal debt and by getting consumers to carry more of the load through cheap mortgages. China Development Bank’s slum-redevelopment lending hit nearly one trillion yuan ($152.6 billion) last year, more than half of which went to purchasing existing commercial housing.”
  • “As a result, real-estate investment has held up reasonably well this year and inventories continue to fall: Vacant residential floor space was down another 10 million square meters in August, even though traditional sales have been lukewarm for months.”